EU makes last-ditch bid for Serbia-Kosovo deal

BRUSSELS/PRISTINA (Reuters) - The European Union gave Serbia a last chance to clinch membership talks with the bloc on Tuesday, summoning the Balkan country to new negotiations on ending the ethnic partition of its former Kosovo province.

With speculation rife that a deal might be near, the European Commission, the EU's executive arm, delayed a report on Serbia's readiness to start accession talks.

The report had been due on Tuesday, before the EU's 27 members consider its findings on April 22.

EU foreign policy chief Catherine Ashton, who two weeks ago declared talks between Kosovo and Serbia over, said she had invited the prime ministers of both sides back to Brussels on Wednesday.

Serbia does not recognize Kosovo's 2008 secession, and last week rejected the principles of an agreement on the status of a small Serb pocket of the majority-Albanian country after six months of talks led by Ashton.

EU enlargement commissioner Stefan Fuele, who is tasked with steering the countries of the Western Balkans towards EU membership, said he was confident an agreement would emerge.

"It is time for Serbia and Kosovo to move on from the past and look ahead to a common European future," he said. "We hope the two leaderships will seize the historic opportunity that lies before them."

Five years since Kosovo seceded, Serbia has signaled it is ready to come to terms with the loss of its southern province in exchange for the economic boost of closer ties with the EU. Serbs consider Kosovo the cradle of their Orthodox Christian faith, but 90 percent of its 1.7 million people are Albanians.

Accession talks would help unlock Serbia's potential as the largest market in the former Yugoslavia, providing a stimulus for reform and a signal of stability for much-needed foreign investors. The country will watch neighboring Croatia, its wartime foe, become the EU's 28th member on July 1.

ETHNIC PARTITION

Kosovo broke away from Serbia in 1998-99, when NATO waged an 11-week air war to halt the killing and expulsion of ethnic Albanian civilians by Serbian forces trying to crush a guerrilla insurgency.

It was late Serb strongman Slobodan Milosevic's last throw of the dice in the bloody collapse of federal Yugoslavia before his ousting in 2000. Kosovo declared independence in 2008 and is recognized by more than 90 countries, including the United States and 22 of the EU's 27 members.

Serbia retained de facto control over a small, Serb-populated pocket of north Kosovo, in an ethnic partition that frequently flares into violence and that the EU says must end. The standoff has frustrated plans by NATO to further cut back its Kosovo peace force, which now numbers 6,000 soldiers.

In a major U-turn in official policy, Serbia's ruling coalition has offered to recognize the authority of Pristina over the north, but wants autonomy for some 50,000 Serbs living there.

Talks in Brussels had foundered over the powers Serbs would wield, particularly over policing and courts. Serbian government officials said progress had been made over several days of informal contacts with Pristina.

Even if the EU opens accession talks, Serbia is unlikely to join before at least 2020. Fellow former Yugoslav republic Slovenia joined in 2004. Croatia follows in July and Montenegro has begun membership talks. Macedonia is a candidate for membership, Bosnia has yet to apply and Kosovo is last in the queue.

In a report on Macedonia, enlargement commissioner Fuele said progress had been made despite a spike in political tensions and reported "new momentum" in efforts to resolve a long-running row with Greece over Macedonia's name, which is holding up its integration with the EU and NATO.

(Additional reporting by Aleksandar Vasovic in Belgrade and Adrian Croft in Brussels; Writing by Matt Robinson; Editing by Alison Williams)